What were the pre-opening costs for Benihana company-owned restaurants for the year ended December 31, 2023?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
and 1,094,572 shares at cost at December 31, 2023 and | | | | December 31, 2022, respectively | (15,051) | (7,169) | | Additional paid-in capital | 58,270 | 55,583 | | Retained earnings | 28,884 | 24,166 | | Accumulated other comprehensive loss | (2,930) | (2,869) | | Total stockholders' equity | 69,176 | 69,714 | | | (1,816) | (1,124) | | Noncontrolling interests | | | | Total equity | 67,360 | 68,590 | | Total liabilities and equity | $ 317,245 | $ 291,024 |
See notes to the consolidated financial statements.
F-4
THE ONE GROUP HOSPITALITY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except earnings per share and related share information)
| For the year ended December 31, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Revenues: | ||||
| Owned restaurant net revenue | $ | 317,366 | $ | 300,859 |
| Management, license and incentive fee revenue | 15,403 | 15,779 | ||
| Total revenues | 332,769 | 316,638 | ||
| Cost and expenses: | ||||
| Owned operating expenses: | ||||
| Owned restaurant cost of sales | 75,727 | 75,365 | ||
| Owned restaurant operating expenses | 191,250 | 174,689 | ||
| Total owned operating expenses | 266,977 | 250,054 | ||
| General and administrative (including stock-based compensation of $5,032 and | ||||
| $3,985 for the years ended December 31, 2023 and 2022, respectively) | 30,751 | 29,081 | ||
| Depreciation and amortization | 15,664 | 12,134 | ||
| Pre-opening expenses | 8,855 | 5,519 | ||
| Transaction costs | 207 | 123 | ||
| Lease termination expenses | — | 257 | ||
| COVID-19 related expenses | — | 2,534 | ||
| Other expenses | 1,021 | 630 | ||
| Total costs and expenses | 323,475 | 300,332 | ||
| Operating income | 9,294 | 16,306 | ||
| Other expenses, net: | ||||
| Interest expense, net of interest income | 7,028 | 2,113 | ||
| Total other expenses, net | 7,028 | 2,113 | ||
| Income before provision for income taxes | 2,266 | 14,193 | ||
| (Benefit) provision for income taxes |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the pre-opening expenses for company-owned restaurants for the year ended December 31, 2023, totaled $8,855,000. This figure contrasts with $5,519,000 for the year ended December 31, 2022, indicating a notable increase in pre-opening costs year over year. These expenses are associated with preparing a restaurant for its initial opening.
For a prospective Benihana franchisee, understanding these pre-opening costs is crucial, even though the figure reflects company-owned operations. While franchisees will have their own set of initial investment costs, this data provides insight into the types and scale of expenses Benihana incurs when launching a new location. This can be a useful benchmark for comparison and planning.
It's important to note that these pre-opening costs are expensed as incurred, meaning they are recognized on the income statement in the period they occur. This accounting treatment can affect the company's profitability in the short term, particularly when Benihana is opening multiple new locations. Franchisees should inquire about the specific items included in these pre-opening costs to better understand the financial dynamics of launching a Benihana restaurant.